The great carry-trade unwind

by

05 Dec 2007

As FX volatility spikes, funds dump the dollar

By Julie Dalla-Costa

After profitably playing the dollar-yen carry trade for years, currency traders abandoned this bet in droves on the summer's uptick in market uncertainty. Instead, they're shorting the dollar. The return of volatility makes the carry trade riskier, after all, while the dollar's descent continues unabated.

In recent times, with volatility subdued and U.S. interest rates on the rise, the dollar-yen carry trade was an easy way to make a buck: Just borrow

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